The Business of Facebook: Social Graphs, Applications, & The Future of the Web


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LinkedIn Founder/Chairman Reid Hoffman's keynote presentation at Graphing Social Patterns 2007

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  • The Business of Facebook: Social Graphs, Applications, & The Future of the Web

    1. The Business of Facebook Applications: Social Graphs, Applications, and the Future of the Web Graphing Social Patterns Reid Hoffman, 9 Oct 2007
    2. Observations and Themes <ul><li>Social Networks and Platforms </li></ul><ul><ul><li>The discussion in 2003; the discussion now </li></ul></ul><ul><ul><li>Contrast: Facebook, MySpace, Ning </li></ul></ul><ul><li>Social Networks and Professional Networks </li></ul><ul><ul><li>Differences in use cases </li></ul></ul><ul><li>One graph to rule them all? </li></ul><ul><li>Facebook Platform: some of the opportunities enabled </li></ul><ul><li>What does the social platform mean for the evolution of the web? </li></ul>
    3. Social Networks and Platforms <ul><li>In 2003 -- the debate around Web 2.0, social networks: what was new? </li></ul><ul><ul><li>Feature vs. Application vs. Platform </li></ul></ul><ul><li>Temporal History </li></ul><ul><ul><li>MySpace: ability to hack in “widgets” </li></ul></ul><ul><ul><li>Ning: the platform for building any type of social network </li></ul></ul><ul><ul><li>Facebook: the first platform on a broad social graph </li></ul></ul><ul><li>Why are Social Networks platforms? </li></ul><ul><ul><li>Social network embodies key data for applications useful in the real world </li></ul></ul><ul><ul><li>Early example: Friendster as a Dating Application </li></ul></ul><ul><ul><li>This data + consumer engagement = channel for these apps </li></ul></ul><ul><li>Key Elements of Facebook’s platform </li></ul><ul><ul><li>Extend functions of profiles, communications, newsfeed </li></ul></ul><ul><ul><li>Integrate general web applications with data, relationships, and communications </li></ul></ul>
    4. Social Networks and Platforms <ul><li>Facebook and MySpace </li></ul><ul><ul><li>MySpace: integrate “includes” of widgets </li></ul></ul><ul><ul><li>MySpace has something like a social graph of linkages, </li></ul></ul><ul><ul><ul><li>But no access to a real set of relationships </li></ul></ul></ul><ul><ul><ul><li>And no access to key data (user, profile) </li></ul></ul></ul><ul><ul><ul><li>And no platform access </li></ul></ul></ul><ul><ul><li>No access to communications or newsfeeds </li></ul></ul><ul><li>Facebook and Ning </li></ul><ul><ul><li>Ning: program your own social network </li></ul></ul><ul><ul><ul><li>Control of policy, set-up, feature set </li></ul></ul></ul><ul><ul><li>Facebook: build upon massive social graph </li></ul></ul><ul><ul><ul><li>Acquire customers </li></ul></ul></ul><ul><ul><ul><li>Leverage key relationships </li></ul></ul></ul><ul><ul><ul><li>Leverage existing communication scheme </li></ul></ul></ul><ul><li>Facebook: platform leverages a communications architecture and a newsfeed “sharing” space </li></ul>
    5. Social and Professional <ul><li>Facebook and Linkedin: Different use cases </li></ul><ul><ul><li>Search </li></ul></ul><ul><ul><ul><li>Contrast: search by name </li></ul></ul></ul><ul><ul><ul><li>Contrast: search for “open source expert” </li></ul></ul></ul><ul><ul><ul><li>Contrast: search for pictures </li></ul></ul></ul><ul><ul><ul><li>Contrast: search for company connections </li></ul></ul></ul><ul><ul><li>Answers </li></ul></ul><ul><ul><ul><li>Contrast: answers application(s) vs. Linkedin Answers </li></ul></ul></ul><ul><ul><li>Messaging </li></ul></ul><ul><ul><ul><li>Contrast: messaging environments (brokerage vs. general sharing) </li></ul></ul></ul><ul><ul><li>Services + Jobs </li></ul></ul><ul><li>Simple misconception: any communications infrastructure can be used for anything. </li></ul><ul><li>Where is there interesting overlap? </li></ul><ul><ul><li>Public profile presence </li></ul></ul><ul><ul><li>Potential business applications upon the social graph </li></ul></ul>
    6. One graph to rule them all? <ul><li>Will there be one social graph platform? </li></ul><ul><ul><li>First: is there only one social graph? (Where do Friendster, Tagged, Hi5, Bebo, etc. fit in with this) </li></ul></ul><ul><ul><li>Second: is there one graph which contains each different sort of relationship (friend, family, acquaintance, professional, etc.)? </li></ul></ul><ul><li>My theory: there will be multiple “graphs” </li></ul><ul><ul><li>There may be multiple social graphs: semantics of the connection </li></ul></ul><ul><ul><ul><li>N.B.: the odd population of graphs, such as Orkut and Brazil </li></ul></ul></ul><ul><ul><li>One graph that includes all of the types of relationship in one perfectly orchestrated universe: not! </li></ul></ul><ul><ul><ul><li>This is the geek, blogger dream. </li></ul></ul></ul><ul><ul><li>It may be important to have different baseline rules on different brands and different networks. </li></ul></ul><ul><li>Fortunately: a massive valuable platform does not require the truth of there being only one big social graph. </li></ul><ul><ul><li>A wide platform is sufficient for an interesting ecosystem </li></ul></ul>
    7. Facebook Platform: possibilities <ul><li>Studying current applications </li></ul><ul><ul><li>Communications: walls, poking, gifts, mail </li></ul></ul><ul><ul><li>Games: the obvious but also </li></ul></ul><ul><ul><ul><li>Comparing people </li></ul></ul></ul><ul><ul><li>Music and Media </li></ul></ul><ul><ul><ul><li>Movies </li></ul></ul></ul><ul><li>Future possibilities (likely) </li></ul><ul><ul><li>Iterations off major use cases today </li></ul></ul><ul><ul><li>Interesting to see what happens with “friending” applications, like Top Friends </li></ul></ul><ul><ul><li>Honesty box </li></ul></ul><ul><li>What’s new? </li></ul><ul><ul><li>The theory of platforms is to enable tons of creativity </li></ul></ul><ul><ul><li>What other apps would be in a 1-1, 1-many, many-many communications environment with your friends? </li></ul></ul>
    8. Facebook Platform: limits <ul><li>Is there a limit to how many applications any user will have? </li></ul><ul><ul><li>Rising above the noise </li></ul></ul><ul><ul><li>Why the metric that Facebook reflects shifted to focus on number of active users </li></ul></ul><ul><li>The areas that have not worked (thus far): </li></ul><ul><ul><li>Business </li></ul></ul><ul><ul><li>Politics </li></ul></ul><ul><ul><li>Money </li></ul></ul><ul><li>The challenge of the “second act” </li></ul><ul><ul><li>Just like the web: the discovery of interest is hard </li></ul></ul><ul><ul><li>But: the key thing is the “second act” </li></ul></ul><ul><li>Role of creativity </li></ul>
    9. Facebook Platform: economics <ul><li>Today: parallel to the internet gold rush </li></ul><ul><ul><li>CPI Installs </li></ul></ul><ul><ul><li>Run of site ad inventory </li></ul></ul><ul><ul><li>Ad network aggregation </li></ul></ul><ul><li>Challenges Today: </li></ul><ul><ul><li>Applications inserting interruptive ads as ways to generate income </li></ul></ul><ul><ul><li>Incented installations </li></ul></ul><ul><ul><li>Installations financed by future hope (not sustainable) </li></ul></ul><ul><li>Future possibilities </li></ul><ul><ul><li>Targeted ads </li></ul></ul><ul><ul><li>Virtual or real currency </li></ul></ul><ul><li>Platform innovation? </li></ul><ul><ul><li>Developers </li></ul></ul><ul><ul><li>Facebook </li></ul></ul>
    10. Platform: economic analysis <ul><li>What will be certainly the case: </li></ul><ul><ul><li>Low cost apps with sufficient sustaining appeal </li></ul></ul><ul><ul><li>Applications that fit the Facebook use cases </li></ul></ul><ul><ul><li>Evolution of key use cases </li></ul></ul><ul><li>What is still up in the air: </li></ul><ul><ul><li>Establishment of substantially new use cases </li></ul></ul><ul><ul><li>Major applications </li></ul></ul><ul><li>Massive competition a la the web: </li></ul><ul><ul><li>Someone else will try to give away anything you charge for </li></ul></ul><ul><ul><li>At least three people will try to copy anything that works </li></ul></ul><ul><ul><li>Competition from companies and from individuals </li></ul></ul><ul><ul><li>People will experiment, but stickiness will matter </li></ul></ul><ul><li>Key factors: distribute, use, retain -- plus economics </li></ul>
    11. Facebook and the Web <ul><li>One angle: new patterns of eMail and communication </li></ul><ul><ul><li>Sharing </li></ul></ul><ul><ul><li>New cycle of communication: the genius of Facebook photosharing </li></ul></ul><ul><ul><li>Look forward to applications the replicate that genius </li></ul></ul><ul><li>Future of discovery of the web? </li></ul><ul><ul><li>Discover through friends and sharing: certainly a piece </li></ul></ul><ul><ul><li>Certainly discovery of people’s social lives </li></ul></ul><ul><li>Applications and the platform: </li></ul><ul><ul><li>Can one website be everything? </li></ul></ul><ul><ul><li>Social graph -- applications </li></ul></ul><ul><li>What does the microcosm mean? </li></ul><ul><ul><li>Not one graph to bind them all, but an interesting new world </li></ul></ul>
    12. Summary <ul><li>Many of the new interesting entrepreneurs from college will first write Facebook applications </li></ul><ul><li>There will be an interesting ecosystem between websites and Facebook applications </li></ul><ul><ul><li>iLike (music) and Flixter (movies) </li></ul></ul><ul><ul><li>Websites establishing their position (contract, acquisition) </li></ul></ul><ul><li>Economics will be a real issue (just like the web) </li></ul><ul><ul><li>General recommendation: keep costs low </li></ul></ul><ul><li>Constant newness will be important for entertainment </li></ul><ul><ul><li>Facebook accomplishes this through the platform </li></ul></ul><ul><ul><li>Applications will need to keep this going </li></ul></ul>
    13. Questions